Believe it or not, the Friday closing price of gbp/usd (1.8145) is actually at the exact 38.2% retracement level of 1.9550 - 1.7270 down move began since December last year.
In case you don’t know, the constant percentage of 38.2 (0.382) is really the inverse of the well-known Fibonacci ratio of 61.8% (0.618), which is famously recognised as the golden ratio of trading, and mystically as the divine proportion of nature (interestingly used too by Dan Brown as key to answer his mysteries in a recent bestseller “the Da Vinci code”- which I enjoyed reading). In trading terms, the levels of 0.382 and 0.618 usually provide very strong support/resistance for currency price movement.
I believe that the short-term correction in gbp/usd could be ended after it had gained back 38.2% of its losses. I expect the market to go sideways from now and if the support continued to hold at 1.8145, we could be heading towards 1.8400, the next retracement level of 50%.
Thus, I will avoid gbp/usd for the coming few days till I grasp a better picture. Hey, may be a good chance for scalping during the time of uncertainty? Meanwhile, I will be seeking trading opportunities in other currency pairs being monitored.
In case you don’t know, the constant percentage of 38.2 (0.382) is really the inverse of the well-known Fibonacci ratio of 61.8% (0.618), which is famously recognised as the golden ratio of trading, and mystically as the divine proportion of nature (interestingly used too by Dan Brown as key to answer his mysteries in a recent bestseller “the Da Vinci code”- which I enjoyed reading). In trading terms, the levels of 0.382 and 0.618 usually provide very strong support/resistance for currency price movement.
I believe that the short-term correction in gbp/usd could be ended after it had gained back 38.2% of its losses. I expect the market to go sideways from now and if the support continued to hold at 1.8145, we could be heading towards 1.8400, the next retracement level of 50%.
Thus, I will avoid gbp/usd for the coming few days till I grasp a better picture. Hey, may be a good chance for scalping during the time of uncertainty? Meanwhile, I will be seeking trading opportunities in other currency pairs being monitored.
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